Post navigation

Detroit arena could cost $500m, require public money

As expected, the news that Mike Ilitch has the lead in buying the Detroit Pistons has led to a full-on media frenzy. Among the highlights:

A new downtown arena to host both the Pistons and Ilitch’s Red Wings would cost $500 million or more, sports consultant Marc Ganis tells the Detroit News. Ganis added, “It’s next to impossible to do that without some taxpayer help.”

Detroit Free Press sports columnist Michael Rosenberg writes that the whole reason Ilitch wants the Pistons and their Auburn Hills arena is to have a threat to move the Pistons to the suburbs, in order to be able to squeeze Detroit for money for a new arena. Detroit Mayor Dave Bing nonetheless declared himself “elated” at the prospect of Ilitch owning the Pistons, which either means he doesn’t think he’s really going to be blackmailed for a new arena, or he’s looking forward to it.

Getting a third pro sports team to play downtown could bolster Detroit’s image as an “urban adult entertainment destination,” says University of Michigan professor Christopher Leinberger, who notes that the city already “boasts the third largest walkable concentration of casinos in the country, behind only Las Vegas and Atlantic City,” and “has the nation’s third largest number of live theater seats, trailing only New York City and Houston.” (Houston?) Not to mention the other “adult entertainment” options available across the bridge in Windsor.

The virtues of making Detroit into the next Las Vegas aside, the arena battle looks like it has the potential to get really ugly really fast if Ilitch wins his bid. I’ll make sure I don’t have any other plans for November…

“…could cost $500M… it’s next to impossible to do that without taxpayer help…”

Translation: The underlying businesses involved will not support this level of expenditure, so someone else ought to pay to make it happen.

Funny, I thought the central tenet of building a business was making sure any capital outlay (especially for facilities and/or R&D) is supportable based on stable future revenues.

Having done studies on publicly and privately financed sports facilities, I can tell you that the privately financed ones do just fine. And it’s mostly because they tend to cost less than a quarter of their equivalent publicly funded counterparts, largely because every dollar invested has to “earn it’s keep”. Who wouldn’t want gold plated urinals, when someone else is paying?

When boiled down, the argument does begin to sound a bit crazy: “We need a new arena, see, because we need to make more money. No, no, the arena will lose money. That’s why we need you to pay for it. Yes, I said we need it to make more money. Right, it will lose money. Why are you looking at me like that?”

I’m not sure what is meant by “a walkable casino district.” They aren’t all that close to each other and unless the weather is fine I don’t think many people would consider going from one to the other on foot.

Speaking of the casinos, they were supposed to bring in thousands upon thousands of new jobs as well as develop and enliven the areas around them. Not much of that has happened and I wonder how much money has been sucked out of the economy.

As to bolstering Detroit’s image as an urban etertainment destination, “bolster” implies adding onto something that is already there and I frankly doubt that across the country anyone has much of an idea of Detroit as an urban entertainment destination. I have no idea about the number of theater seats but does anyone think that means Detroit rivals Chicago, say, or Los Angeles in terms of theater?

But judging from the reaction of the local media to the propspect of the Illitches in effect having a stranglehold on the local sports and concert venues, the Illitches hardly need to spread any money around…unless they already have.